China’s stock market is in the midst of a rally. Should upside continue, it opens the pathway for investment opportunities in a pair of Invesco exchange traded funds (ETFs).
The second largest economy continues to try and recover from the effects of a real estate development crisis in 2021. The government has been implementing stimulus measures to revive growth. Investors may be sensing that the economy is finally turning a corner. More positive economic data came in the form of higher exports last month.
“China’s exports rose slightly more than expected in April in a boost for the economy, and imports surged,” reported Bloomberg. “Exports increased 1.5% in dollar terms from a year earlier, reversing a drop in March, while imports climbed 8.4%, the customs administration said Thursday. That left a trade surplus of $72.4 billion for the month. Economists had forecast that exports would rise by 1.3% while imports would climb by 4.7%.”
As mentioned, the optimism is flowing into the country’s stock market as Hong Kong stocks have reached eight-month highs. More stimulus measures implemented by the Chinese government should help continue to buoy market sentiment and if more positive economic data continues, that should lift stocks further.
“There are growing expectations about policy support and that has apparently lifted market sentiment,” said An Qingliang, an analyst at Guorong Securities, via a South China Morning Post report. “More follow-up measures will be implemented at a faster pace going forward to resolve the crisis on the property market and defuse the risk. These steps will help reinforced expectations about a pickup in the economy.”
2 ETFs to Consider in an Early Rally
If China’s rally continues to persist, investors can get exposure via a pair of exchange-traded funds (ETFs). Two to consider are the Invesco Golden Dragon China ETF (PGJ ) and the Invesco China Technology ETF (CQQQ ).
PGJ is based on the NASDAQ Golden Dragon China Index (Index). The Index is composed of US exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. The fund diversified its holdings across a variety of sectors with the top three comprised of consumer discretionary, communications services, and industrials. Additionally, the fund offers a quarterly distribution with a current 12-month rate of 2.39% as of May 8.
CQQQ is based on the FTSE China Incl A 25% Technology Capped Index (Index). The Index includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B-shares. The fund’s top holdings comprise a who’s who in Chinese tech companies, including Tencent Holdings PDD Holdings, Meituan, and Baidu.
For more news, information, and analysis, visit the Innovative ETFs Channel.
